Yellen says June 1 is ‘hard deadline’ for raising debt ceiling

Yellen says June 1 is ‘hard deadline’ for raising debt ceiling

21 May    Finance News, PMN Business, REU

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WASHINGTON — U.S. Treasury Secretary Janet Yellen on Sunday said June 1 remains a “hard deadline” for raising the federal debt limit, with the odds quite low that the government will collect enough revenue to bridge to June 15, when more tax receipts are due.

Yellen, speaking on NBC’s “Meet the Press” program, said there would be hard choices to make about payments to Americans if Congress failed to raise the $31.4 trillion debt ceiling before Treasury ran out of cash and was forced to default.

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“I indicated in my last letter to Congress that we expect to be unable to pay all of our bills in early June and possibly as soon as June 1. And I will continue to update Congress, but I certainly haven’t changed my assessment. So I think that that’s a hard deadline,” she said.

U.S. President Joe Biden on Sunday called Republicans’ latest offers in talks on lifting the government’s debt ceiling “unacceptable,” but said he would be willing to cut spending together with tax adjustments to reach a deal.

He said he would speak to top congressional Republican Kevin McCarthy on his flight home from his meeting with leaders from the Group of Seven (G7) rich nations in Hiroshima, Japan.

Less than two weeks remain until June 1, when the Treasury Department has warned that the federal government could be unable to pay all its debts. That would trigger a default that could cause chaos in financial markets and spike interest rates.

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Asked if Treasury could possibly reach June 15 before running out of cash, Yellen said there was some uncertainty about the exact so-called x-date, but she doubted the money would last through June 15.

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“There’s always uncertainty about tax receipts and spending, and so it’s hard to be absolutely certain about this, but my assessment is that the odds of reaching June 15 while being able to pay all of our bills is quite low,” she said.

Biden told reporters in Japan that he believed he had the authority to invoke the 14th Amendment to the U.S. Constitution to raise the debt ceiling without Congress, but said it was unclear that enough time remained to try to use that untested legal theory to avoid default.

Yellen said invoking the amendment “doesn’t seem like something that could be appropriately used in these circumstances, given the legal uncertainty around it, and given the tight time frame we’re on.” (Reporting by Andrea Shalal and Susan Heavey; Editing by Lisa Shumaker and Bill Berkrot)

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